10 Things That You’ll Spend More on in Retirement

While overall transportation expenses decline throughout retirement, many retirees take the kind of trips they could only dream about while working full-time. For instance, compared with their working peers, retirees are choosing longer cruises and cruises that visit more destinations, according to Colleen McDaniel, senior executive editor of Cruise Critic.

To make these dreams a more affordable reality, Deborah Meyer, a certified financial planner and CEO of WorthyNest, recommends a five-step plan for pre-retirees:

1. Assign specific cost estimates to travel goals.
2. Break the big savings goal into monthly or quarterly allocations to savings.
3. Adjust income and expenses to make room for the regular savings.
4. Don’t compromise on future goals.
5. Act on achieved goals.

The Employee Benefit Research Institute found that the percentage of a household’s total spending on health care increases from 8% in preretirement households to 19% by the time a household is past the age of 85.

Unpredictable and costly new diagnoses and hospitalizations drive much of the increase in health care spending for the average retired household, but overall spending rises for general health needs, health insurance, prescription medication, medical supplies and medical services as well.

Chances are, you’ll have finished paying off your mortgage (or come pretty close) when you reach retirement age. That means you’ll be saving thousands each year. However, the average retired household spends more each year on utilities than the average working household, according to the Urban Institute. Why? If retirees are home more often, they’re simply using utilities more.

Moving and Relocating

According to Mike Palmer, a certified financial planner with Ark Royal Wealth Management, downsizing can present huge unexpected costs for some of his clients, particularly when they want to stay within urban areas. “I see a lot of folks thinking they’re going to walk away with $200,000 [by downsizing], but that’s rare. In most cases, it will be lateral,” he says. To avoid this, he recommends trying to move from an urban area to a more rural one.

It can be nearly impossible to predict every moving expense as it comes, but Squared Away can help: It offers a calculator that estimates what you’ll spend.

With more time on their hands, retirees may exercise more—raising their spending on gym memberships and fitness classes. Research has also shown that retirement itself is a motivator to get fit. With a flexible schedule free of commuting and the stress of a busy work week, many retirees drop unhealthy habits, such as drinking and smoking, and pick up healthier ones.

Approximately 53% of retired Americans participate in physical activity and allocate about 13% of their annual spending to fitness and leisure activities. Because of this, Fung Global Retail & Technology says that the fitness industry is starting to cater to seniors as well, offering more specific (and pricey) gym options for aging populations.

Marguerita Cheng, the chief executive officer of Blue Ocean Global Wealth, says that fitness is one of the biggest new expenses she sees her retired clients take on. For her clients, she says, it is often the fear of declining health as they age that motivates them to take fitness seriously. Some of her clients put so much time and money into fitness that they schedule meetings with her around their yoga or spinning classes.

Unfortunately, retirees are especially vulnerable to accumulating debt and subsequent interest. Although the average debt ballooned across all age groups between 1989 and 2016, older retirees were by far the hardest hit. According to a study from the National Council on Aging, the average debt held by people 65 and older keeps climbing. The total median debt for those 65 and up in 2016 was $31,100.

Credit cards with high-interest rates carry the greatest risk to retirement security. According to the research and advocacy group Demos, roughly half of those older than 50 reported using credit cards to pay medical expenses, as well as groceries, utilities and even rent.

If bills are beginning to pile up, don’t hesitate to ask for help. Focus on paying off the cards with the highest rates first, and consider consolidating your balances on a card offering a 0% interest rate if it will take more than a few months to pay off each card.

Despite their reduced income, Americans age 65 and up contribute almost 11% more to religious, educational, charitable and political organizations than people from 55 to 64. Retirees age 75 and older donate even more, on average.

Part of this phenomenon is psychological. Researchers have found that older adults take more pleasure in charitable donations than their younger counterparts. On the other hand, older retirees may have less control over their finances than they realize. A diminished capacity for financial decision-making in retirement is “extremely common,” says Daniel Marson, a neurology professor at the University of Alabama at Birmingham. “In fact, I might say it’s inevitable.”

While many retirees have no problem managing their money into old age, it never hurts to have a trusted family member keep an eye on things. Services such as EverSafe, for example, allow a designated family member to monitor a retiree’s finances and get alerts in case of excessive withdrawals, changes in spending patterns and other unusual activity—all without the retiree losing control of their money.

A greater number of subscriptions to newspapers, magazines and audiobook services — the result of a more flexible schedule — accounts for some of the increase.

Fee-only planners may charge a flat annual retainer (which could run a few thousand dollars or more), or they may charge on an hourly basis (often from $100 to $250 per hour), by the project (from $1,000 up to $10,000 for a comprehensive plan) or, if they’re managing your investments, as a percentage of assets (from about 0.5% to 1.25% of your investable assets). Or they may use some combination of those billing models.

In a 2016 survey of financial planning firms, Fidelity found that 23% of all clients were older than 70, and they held as much as 28% of total assets. According to AARP, retirees should continue to use financial planners to assist with relocating, with managing new medical expenses and to address changing financial needs.